At the heart of almost every conversation about health care reform is one question: “How do we make health care affordable and accessible for everyone in America?” As representatives of America’s largest employers, we believe the most important strategy for transforming our nation’s health care system is to accelerate payment and delivery reforms that share support among both Republicans and Democrats — value-based health care. This approach focuses on innovations in provider payment, delivery system redesign, and consumer engagement. Importantly, value means both higher quality and lower cost.
Why is this important in the current environment? Just look at the numbers. The U.S. spends $3 trillion, 17 percent of our GDP, on health care – twice the average of other developed nations. In 2019, the amount the federal government spends on health care will overtake the entire federal discretionary budget. In other words, we will spend more on health care than the combined budgets of the Departments of Defense, Homeland Security, Education, Energy, Justice, Commerce, State, Housing and Urban Development, Labor, Transportation, Treasury and the Environmental Protection Agency, National Science Foundation, NASA, General Services Administration and all emergency spending. This shocking statistic should be an urgent call to action to pursue all strategies that can help decrease costs and improve care, including proven value-based care models.
Value-based care needs to be at the foundation of fixing our nation’s health care system, with the federal government leveraging proven private-sector, market-based strategies. While there are several value-based approaches government programs may adopt, bundled– or episode-based– payments have proven to be highly effective. However, the Department of Health and Human Services recently announced that it is significantly reducing the use of mandatory bundled payments and will increase opportunities for voluntary participation in this model. We are optimistic that voluntary bundled payment programs will still have a positive impact on quality improvement, but such voluntary programs may only attract the highest quality providers, thus limiting system-wide cost savings.
Importantly, private-sector voluntary bundled payment programs have produced positive results in savings and outcomes. Employers such as JetBlue, Lowe’s, McKesson, and Wal-Mart have participated in the Employer Centers of Excellence Network, a bundled payment program that offers insights for the Centers for Medicare and Medicaid Services as their leaders pursue a voluntary – as opposed to a mandatory – approach.
Currently, the ECEN program includes hip and knee replacements, spine care, and bariatric surgery provided at health care systems carefully selected after a rigorous evaluation.
Under the program, negotiated prospective bundled rates cover all services rendered during the episode of care. When the payment rate is combined with the savings from fewer complications and better patient selection, the ECEN patient total cost is 10-15 percent lower than the traditional fee-for-service patient, and patient outcomes are better.
For Lowe’s, the ECEN patients had lower out-of-pocket costs, and 100 percent of the participants would recommend the program to their co-workers or family. Fewer than 1 percent of ECEN patients had to return to the hospital because of a surgery complication – compared to over 6 percent of patients who received care at their regular community hospital. Additionally, all of the ECEN patients were able to go directly home after surgery, while over 9 percent of the community patients needed care at a skilled nursing facility.
Finally, Lowe’s estimates there have been $1-2 million savings from the ECEN spine program per year. Half of patients recommended for surgery in the old model were found by ECEN providers not to be good candidates.
Employers are reorienting the health care system toward value using strategies like ECEN. However, to reach the tipping point of change where consistent high-quality care is delivered everywhere, federal programs must be equally aggressive. We need government leadership on the federal level and a commitment from the president to stand behind private-sector innovation. We need the government to leverage its influence as the largest single purchaser of health care and help break down policy barriers that hinder adoption. By incorporating the private sector innovation’s most beneficial features into Medicare and other government programs, the administration will not only save taxpayer dollars, but will also improve health outcomes for patients.
The combined impact of the private and public sectors working together to advance value-based care is exponentially greater than any one entity can accomplish themselves. We truly believe we will benefit more when we benefit together.
Annette Guarisco Fildes is the president and CEO of The ERISA Industry Committee and David Lansky is the president and CEO of the Pacific Business Group on Health.
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